DOW CHEMICAL CO /DE/

RESULTS OF OPERATIONS

Net Sales

The following tables summarize net sales and sales variances by operating segment and geographic region from the prior year:

Net sales in the first quarter of 2026 were $9.8 billion, down 6 percent from $10.4 billion in the first quarter of 2025, with local price down 7 percent, volume down 2 percent, and a favorable currency impact of 3 percent. Net sales decreased in all operating segments except Performance Materials & Coatings and all geographic regions except Latin America. Local price decreased in all geographic regions and all operating segments, with Packaging & Specialty Plastics down 9 percent, Industrial Intermediates & Infrastructure down 8 percent, and Performance Materials & Coatings down 4 percent. Volume decreased 2 percent, driven by U.S. & Canada (down 4 percent) and EMEAI (down 2 percent) partially offset by increases in Latin America (up 9 percent). Volume decreased in Packaging & Specialty Plastics (down 1 percent) and Industrial Intermediates & Infrastructure (down 4 percent) and increased in Performance Materials & Coatings (up 2 percent). Currency favorably impacted net sales by 3 percent, driven by EMEAI (up 8 percent) and Asia Pacific (up 2 percent). Excluding the Hydrocarbons & Energy business, net sales decreased 4 percent.

Cost of Sales

Cost of sales ("COS") was $9.2 billion in the first quarter of 2026, compared with $9.8 billion in the first quarter of 2025. COS decreased in the first quarter of 2026 primarily due to lower raw material, feedstock and energy costs and the impact of the Company’s cost reduction initiatives. COS as a percentage of net sales was 93.5 percent in the first quarter of 2026 (93.6 percent in the first quarter of 2025).

Research and Development Expenses

Research and development ("R&D") expenses totaled $181 million in the first quarter of 2026, compared with $200 million in the first quarter of 2025. R&D expenses decreased in the first quarter of 2026 primarily due to the Company's cost reduction initiatives.

Selling, General and Administrative Expenses

Selling, general and administrative ("SG&A") expenses totaled $417 million in the first quarter of 2026, compared with $366 million in the first quarter of 2025. SG&A expenses increased in the first quarter of 2026 primarily due to costs to achieve Transform to Outperform, partially offset by the impact of the Company’s cost reduction initiatives.

Amortization of Intangibles

Amortization of intangibles was $46 million in the first quarter of 2026 compared with $76 million in the first quarter of 2025. Amortization of intangibles decreased primarily due to certain intangible assets becoming fully amortized in 2025.

Restructuring and Asset Related Charges - Net

Transform to Outperform

On January 26, 2026, the Dow Inc. Board of Directors ("Board") approved Transform to Outperform, a comprehensive set of actions designed to improve near-term Operating EBITDA by simplifying the Company's operating model, reducing its cost structure and delivering faster growth. As a result of these actions, in the first quarter of 2026, the Company recorded pretax charges of $27 million for severance and related benefit costs, related to Corporate. See Note 4 to the Consolidated Financial Statements for additional information.

2025 Restructuring Program

On January 27, 2025, the Board approved targeted actions to further achieve the Company's cost reduction initiatives in response to ongoing macroeconomic uncertainty, while reinforcing its long-term competitiveness across the economic cycle. As a result of these actions, in the first quarter of 2025, the Company recorded pretax charges of $207 million for severance and related benefits costs, related to Corporate. See Note 4 to the Consolidated Financial Statements for additional information.

2023 Restructuring Program

Actions related to the restructuring program approved by the Board on January 25, 2023 were complete at the end of the second quarter of 2025. In the first quarter of 2025, the Company recorded an additional pretax restructuring charge of $5 million for asset write-downs and write-offs and an asset related credit adjustment of $4 million, related to Industrial Intermediates & Infrastructure. See Note 4 to the Consolidated Financial Statements for additional information.

Equity in Losses of Nonconsolidated Affiliates

The Company's share of equity in losses of nonconsolidated affiliates was $303 million in the first quarter of 2026, compared with equity in losses of nonconsolidated affiliates of $20 million in the first quarter of 2025. The increase was primarily related to an adjustment to the Company's liability associated with its guarantee of Sadara's project financing debt and was related to Packaging & Specialty Plastics ($81 million) and Industrial Intermediates & Infrastructure ($211 million), and was partially offset by the Company's suspension of recognition of its share of equity losses from Sadara in the first quarter of 2026. Cash dividends from nonconsolidated affiliates were $199 million for the first three months of 2026, compared with $113 million for the first three months of 2025. See Notes 9 and 11 for additional information.

Sundry Income (Expense) – Net

Sundry income (expense) - net for the three months ended March 31, 2026 was income of $121 million, compared with income of $13 million for the three months ended March 31, 2025. The increase in sundry income is primarily due to foreign currency exchange gains, a gain associated with the Nova ethylene asset matter, and the absence of a loss on early extinguishment of debt that occurred in the first quarter of 2025, partially offset by lower non-operating pension and postretirement benefit plan credits. See Notes 5, 11 and 15 to the Consolidated Financial Statements for additional information.

Interest Expense and Amortization of Debt Discount

Interest expense and amortization of debt discount was $219 million in the first quarter of 2026, compared with $216 million in the first quarter of 2025. See Liquidity and Capital Resources in Management's Discussion and Analysis of Financial Condition and Results of Operations for additional information.

Provision (Credit) for Income Taxes

The Company's effective tax rate fluctuates based on, among other factors, where income is earned, the level of income relative to tax attributes and the level of equity earnings, since most earnings from the Company's equity method investments are taxed at the joint venture level. In the first quarter of 2026, the Company reported a provision for income taxes of $55 million, resulting in a negative effective tax rate of 14.1 percent. In the first quarter of 2025, the Company reported a credit for income taxes of $84 million, resulting in an effective tax rate of 22.5 percent. The reported provision (credit) for income taxes and effective tax rates for TDCC are substantially similar.

The provision for income taxes for the first quarter of 2026 was unfavorably impacted by tax expense related to the Nova ethylene asset matter, partially offset by tax benefits related to changes in uncertain tax positions. The credit for income taxes for the first quarter of 2025 was primarily due to the geographic mix of earnings.

The Company continues to monitor and evaluate legislative developments related to the Global Anti-Base Erosion Proposal Regime ("GloBE") established by the Organization of Economic Cooperation and Development’s ("OECD") Pillar Two framework. Several countries in which the Company operates have adopted GloBE into their legislation and several others are expected to enact these rules in the future. To date, such legislation has not materially impacted the Company's effective tax rate.

Net Income Attributable to Noncontrolling Interests

Net income attributable to noncontrolling interests was $88 million in the first quarter of 2026, compared with $17 million in the first quarter of 2025. The increase in net income attributable to noncontrolling interests reflects the ownership interest in Diamond Infrastructure Solutions held by InfraPark. InfraPark purchased 40 percent of the membership interests in Diamond Infrastructure Solutions in the second quarter of 2025 and an additional 9 percent in the third quarter of 2025. See Notes 14 and 19 to the Consolidated Financial Statements for additional information.

Net Loss Available for Common Stockholder(s)

Dow Inc.

Net loss available for Dow Inc. common stockholders was $533 million, or $0.74 per share, in the first quarter of 2026, compared with $307 million, or $0.44 per share, in the first quarter of 2025. See Note 7 to the Consolidated Financial Statements for details on Dow Inc.'s earnings per share calculations.

TDCC

Net loss available for the TDCC common stockholder was $531 million in the first quarter of 2026, compared with $305 million in the first quarter of 2025. TDCC's common shares are owned solely by Dow Inc.

SEGMENT RESULTS

For further discussion of the Company's segments, see Part I, Item 1. Business of the combined Dow Inc. and TDCC Annual Report on Form 10-K for the fiscal year ended December 31, 2025 ("2025 10-K"), filed with the SEC on February 3, 2026.

Dow’s measure of profit/loss for segment reporting purposes is Operating EBIT as this is the manner in which the chief executive officer, chief operating officer, chief financial officer, general counsel and corporate secretary, and senior vice president of corporate development, together the "executive committee" and chief operating decision maker ("CODM"), assesses performance and allocates resources. The CODM compares quarterly results to both the year-ago and sequential periods to assess performance and allocate resources to each segment. The Company defines Operating EBIT as earnings (i.e., "Loss before income taxes") before interest, excluding the impact of significant items. Operating EBIT by segment includes all operating items relating to the businesses; items that principally apply to Dow as a whole are assigned to Corporate. See Note 20 to the Consolidated Financial Statements for reconciliations of these measures.

PACKAGING & SPECIALTY PLASTICS

1. The three months ended March 31, 2026 includes a significant item for $81 million of losses related to an adjustment to the Company's liability associated with its guarantee of Sadara's project financing debt.

Packaging & Specialty Plastics net sales were $4,919 million in the first quarter of 2026, down 7 percent from net sales of $5,310 million in the first quarter of 2025, with local price down 9 percent, volume down 1 percent and currency up 3 percent. Local price decreased in Packaging and Specialty Plastics in all geographic regions, driven by lower pricing of polyethylene and functional polymers. Local price decreased in Hydrocarbons & Energy in all geographic regions, driven by olefins and aromatics in the U.S. & Canada and EMEAI. Volume increased in Packaging and Specialty Plastics across all geographic regions, driven by higher volumes in polyethylene, partially offset by lower non-recurring licensing sales. Volume decreased in Hydrocarbons & Energy due to planned maintenance activity in the U.S. Gulf Coast and the impact from idling an integrated ethylene cracker in EMEAI in mid-2025. Currency had a favorable impact on sales in both businesses and was primarily driven by EMEAI.

Operating EBIT was $208 million in the first quarter of 2026, down $134 million from Operating EBIT of $342 million in the first quarter of 2025. Operating EBIT decreased primarily due to lower integrated margins, increased planned maintenance costs, and lower equity earnings, which were partially offset by the impact of the Company's cost reduction initiatives.

INDUSTRIAL INTERMEDIATES & INFRASTRUCTURE

1. The three months ended March 31, 2026 includes a significant item for $211 million of losses related to an adjustment to the Company's liability associated with its guarantee of Sadara's project financing debt.

Industrial Intermediates & Infrastructure net sales were $2,626 million in the first quarter of 2026, down 8 percent from net sales of $2,855 million in the first quarter of 2025, with local price down 8 percent, volume down 4 percent and currency up 4 percent. Local prices declined across both businesses and all geographic regions. Volume decreased in Polyurethanes & Construction Chemicals in all geographic regions except Latin America, due to lower volumes from the shutdown of a higher-cost upstream propylene oxide unit in the U.S. Gulf Coast in late 2025 and the impact of the Middle East conflict. Volume decreased in Industrial Solutions driven by declines in licensing revenue and the impact of the conflict in the Middle East, which more than offset higher volumes from recent alkoxylation investments. Currency favorably impacted sales in both businesses and was driven by EMEAI.

Operating EBIT was a loss of $118 million in the first quarter of 2026, up $10 million from an Operating EBIT loss of $128 million in the first quarter of 2025. Operating EBIT increased primarily driven by lower raw material and energy costs, lower planned maintenance costs, suspended Sadara equity loss recognition, and the impact of the Company's cost reduction initiatives, partially offset by lower selling prices.

PERFORMANCE MATERIALS & COATINGS

Performance Materials & Coatings net sales were $2,080 million in the first quarter of 2026, flat compared to net sales of $2,071 million in the first quarter of 2025, with local price down 4 percent, volume up 2 percent, and a favorable currency impact of 2 percent. Coatings & Performance Monomers local price decreased across all geographic regions, primarily in acrylic monomers and architectural coatings. Local price decreased in Consumer Solutions in all geographic regions, except the U.S. and Canada, led by upstream siloxanes. Volume increased in Coatings & Performance Monomers driven by higher demand for acrylic monomers. Volume increased in Consumer Solutions in all geographic regions except EMEAI. Volume increased primarily in downstream silicones led by consumer and electronics. The favorable currency impact was driven by EMEAI and Asia Pacific in both businesses.

Operating EBIT was $117 million in the first quarter of 2026, up $68 million from Operating EBIT of $49 million in the first quarter of 2025. Operating EBIT increased in both businesses primarily due to the impact of the Company's cost reduction initiatives, lower planned maintenance costs, and reduced intangible asset amortization expenses in Consumer Solutions, partially offset by lower prices.

CORPORATE

Net sales for Corporate, which primarily relate to the Company's insurance operations, were$169 million in the first quarter of 2026, a decrease from net sales of $195 million in the first quarter of 2025.

Operating EBITwas a loss of$53 million in the first quarter of 2026, compared with a loss of $33 million in the first quarter of 2025. Operating EBIT decreased primarily due to higher environmental costs.